Understanding Deemed Supply under UAE VAT

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When is a Deemed Supply Applicable?
Deemed supplies typically occur when goods or services are used outside taxable business activities, such as:
1. Private use of business assets
Example: A company car or office furniture used personally. VAT must be accounted for as if the business supplied the asset to itself.
2. Gifts or promotional items
Example: Stock items given to customers. The market value of the gift is treated as a taxable supply.
3. Transfer of business assets without consideration
Example: Moving assets to another company under the same ownership.
4. Removal of goods from a Designated Zone into the UAE mainland VAT must be accounted for on such transfers.

Important Consideration
1. Input VAT may need adjustment if assets are used for non-business purposes.
2. Output VAT must be self-assessed on the deemed supply value.
3. Proper documentation is essential to ensure compliance.

Conclusion
Deemed supply rules ensure VAT is applied fairly, even without a commercial sale. Businesses should track asset use, gifts, and transfers to avoid underreporting VAT.

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